Rachael Singh, Accountancy Age, Friday 29 October 2010 at 16:24:00

Number of agreements between HMRC and businesses to delay tax payments hasfallen dramatically

Deferred tax requests agreed by the taxman has significantly declined,according to figures released by HM Revenue & Customs.

The data shows from January to September 2009 there were 196,200 Time to Pay(TTP) arrangements compared with 114,600 for the same period in 2010.

From January to September 2010 there was 1.9bn worth of arrangementsapproved, compared with 3.4bn for the same period last year.

The amount of TTP requests that have been declined has doubled in the lastyear. For the period January to September 2010 the taxman declined 5.2% of TTParrangements, compared with 2.6% for the same period in 2009.

According to Philip White, chief executive of finance provider Syscap, theincrease in declined TTPs is a "clear confirmation" HMRC is taking a tougherstance on tax deferrals.

HMRC could be gradually winding down the scheme, added White.

The was no available information on how many businesses requested repeatdeferrals, however, Frances Coulson, vice president of insolvency trade body R3,said the amount had "increased considerably", from September 2009 to early 2010.

"Without new figures, it is impossible to tell how many companies under theTime to Pay banner are severely distressed and at risk of insolvency," she said.

Coulson added towards the end of last year two thirds of insolvencypractitioners had seen companies move from a TTP to a formal insolvency.

"While the majority of companies in Time to Pay surely use this period as auseful breathing space, a worrying minority may be unable to get their house inorder," said Coulson.

Although the arrangement requests are declining Coulson said IPs arepredicting an increase in corporate insolvencies next year.

"We should not assume 2011 will automatically be smooth sailing."

There were 256,500 TTP arrangements from December 2008, when the schemebegan, to December 2009 - which equated to 4.5bn deferred tax payments.